People are worried about America's solvency

Can the US Become Insolvent?

• Some argue a fiat-issuing government “cannot be insolvent” in its own currency; it can always create dollars to meet USD obligations.
• Others counter that solvency is effectively about confidence: if enough holders dump Treasuries or reject the dollar, crisis follows even without formal default.
• Distinction is made between literal solvency and a “debt crisis” or “soft default” via inflation and currency debasement.

Debt, Interest, and Fiscal Position

• Figures cited: government debt ~123% of GDP; deficit ~5.9% of GDP; interest ~4.2% of GDP.
• One calculation claims roughly one-third of individual income tax revenue goes to interest; another notes total interest is ~15% of total revenue.
• Some reference much larger “total debt/unfunded liabilities” estimates ($80–200T) and argue it will never be repaid in real terms, only inflated away.

Dollar, Reserve Currency, and Petrodollar

• Debate over future reserve currency: possibilities mentioned include baskets of currencies, crypto, or a neutral international unit.
• Some expect gradual loss of dollar dominance and a living‑standard “haircut” analogous to post‑imperial Britain.
• Petrodollar enforcement is linked by some to US military interventions, though others see currency as a secondary factor.
• Skepticism that any single successor (euro, yuan, BRICS) is yet ready; China’s political risk and capital controls are emphasized.

Markets, Treasuries, and Global Shifts

• US Treasuries still seen by many as the “least bad” safe asset; crisis often drives more buying, not less.
• Others note rising interest costs, declining marginal demand, Japan’s large holdings, and some recent interest in Chinese bonds as warning signs.
• Disagreement on whether “BRICS taking over” is real or overstated; high yields in those countries are also read as risk, not strength.

Politics and Fiscal Responsibility

• Long subthread on US parties’ fiscal records: multiple tables (debt, deficit, debt/GDP) suggest Democratic presidents have, on average, improved deficits more than Republican ones, though Congress control and inflation adjustments complicate attribution.
• The GOP’s “fiscal restraint” branding is widely challenged; tax cuts plus high spending (wars, etc.) are cited.
• Others argue voters in all rich democracies demand more services than they’re willing to pay for, pushing borrowing regardless of party.

Policy Responses and UBI Debate

• Some advocate that, as borrowing capacity erodes, money creation will become primary and should be routed as a universal basic income rather than to banks and asset holders.
• Claimed benefits of UBI: better health and mental health, higher effective IQ/productivity, more bargaining power and entrepreneurship.
• Critics see this as a rebranded Modern Monetary Theory path toward inflation and “Argentina‑style” outcomes, arguing instead for fiscal restraint and higher taxes where needed.
• There is disagreement over whether modest inflation is beneficial rebalancing or hidden expropriation of savers.

Historical Analogies and Systemic Risk

• Comparisons are drawn to Rome’s debasement, the late Bronze Age collapse, the USSR’s breakup, and post‑Soviet “shock therapy.”
• One view: no major system looks fragile until it fails; confidence in US permanence may be similarly misplaced.
• Others stress the US’s large tax base, relatively low overall tax rates, and control of its currency as powerful stabilizers, making a near‑term solvency crisis unlikely even if long‑run imbalances are real.